France

1. Lending in France - Scope of the French banking monopoly

Credit transactions in France are subject to the French banking monopoly rules, regulated by article L511-5 of the French Monetary and Financial code.

Exceptions to the French banking monopoly rules encompass:

1. Shareholder loans to a company in which the lending shareholder holds 5% or more of the share capital;
2. Borrowings in the form of bonds or convertible bonds.

2. Effective Global Rate

French borrowers shall be informed, before the signing of any loan agreement, of the effective global rate (“TEG”) applicable to such loan, the TEG being the sum of all costs associated with the loan, such as interest, commissions, commissions, insurance and administrative fees.

In the event that such TEG is not mentioned in a loan documentation or is incorrect, the lender may be deprived of its right to receive interest amounts in the proportion set by court.

3. Guarantees – Cross-collateralisation – Corpore Interest

A French commercial company may guarantee borrowings of other members of its group, subject to compliance of certain conditions related to the compliance with corporate interest and to the prohibition of financial assistance (governed by article 225-216 of the Commercial Code).

In the context of group companies, according to French case law, upstream guarantees or cross-guarantees may be considered as complying with the company’s corporate interest if the following test is satisfied:

1. the companies granting the upstream guarantee shall be part of a group of company with a defined group strategy;
2. the granting of the security/guarantee is designed to satisfy a common economic, social or financial interest to all the members of the group of companies;
3. consideration is received by the company granting the upstream guarantee; and
4. the company granting the upstream guarantee shall receive consideration and the granting of the security interest does not exceed the financial capacity of the grantor.

Granting of a security interest by a company to secure the obligations of one of its subsidiaries is generally considered as complying with such company corporate interest benefit.

More generally, if it is considered that the company granting a security interest has not received an appropriate corporate interest, the managers/directors of such company may face civil liability for mismanagement and/or, in the most serious cases, criminal liability for misuse of corporate assets (abus de biens sociaux in the case of sociétés anonymes, sociétés par actions simplifiées, sociétés à responsabilité limitée and sociétés en commandite par actions).

4. Authorisation 

Prior authorization of the board of directors (conseil d'administration) or of the supervisory board (conseil de surveillance) is required for any guarantee granted by société anonyme. Guarantees/security interests in breach of such prior authorization would be deemed null and void.

Other than for société anonyme, the legal representative of a French commercial company is deemed to have the authority to grant guarantees and security interests on behalf of its company, subject to compliance with its bylaws which may provide that a shareholder or specific designated body approval is required prior to the issuance of a guarantee.

Guarantees/security interests granted in breach of such prior authorization could be deemed null and void if it is considered that the beneficiary of the guarantee could not ignore the provisions of the bylaws.

5. Guarantee given by individual

If the guarantee is granted by an individual, the signature of the relevant signatory shall be preceded by a written handwritten statement specifying (i) the maximum guaranteed amount in letters and numbers and (ii) the waiver its right of discussion or of division (renonciation au benefice de discussion et de division), if any.

The lack of those mentions are sanctioned by the nullity of the guarantee.

Any guarantee granted by an individual granted shall be proportionate to the individual’s income and assets. If the beneficiary of the guarantee is a professional creditor, the latter shall assess that the individual’s wealth and the amount of the guarantee granted to the individual's wealth. The latest case-law indicate that, in case disproportion of the guarantee granted by an individual, the guarantee shall be reduced proportionally to the individual’s wealth at the time of the granting of such guarantee.

6. Guarantee given by a corporate entity to a third party to credit institution or a financial company

When a guarantee is granted by an individual or a corporate company in favour of a credit institution or a financial company, the beneficiary of such guarantee is required to provide to the guarantor, every year before 31 March, the amount outstanding as of 31 December of the preceding year of principal, interest and other ancillary amounts under the guaranteed amounts.

The absence of delivery of such information is the forfeiture of interests during the period where the above information was not provided.

7. Agency/Trustee

A special security agent regime was introduced in the Civil Code in 2007 and reshaped in 2017.

Under such special regime, any security or guarantee may be taken, managed, filed and enforced by the security agent acting in its own name on behalf of the creditors of the secured obligations, and such security agent may also file any claim in any bankruptcy proceeding.

Agent remains however mostly appointed under the regime of article 1984 of the Civil Code, providing for a standard on a power of attorney granted by lenders to the agent.

8. Choice of law

The choice of foreign law to govern the international contract will be upheld by French courts to the extent that (a) the provisions of the relevant foreign law are not considered by French courts to be contrary to French public policy doctrine as applied in private international matters (ordre public international français) or French overriding mandatory provisions (lois de police) (i.e., provisions regarded as crucial by France for safeguarding its public interests to such an extent that they are applicable to any situation falling within their scope, irrespective of the applicable law), and (b) the choice is found not to be contrary to the mandatory provisions of the laws of the jurisdiction where the obligations arising out of the contract have to be or have been performed, in so far as those mandatory provisions render the performance of the contract unlawful.

9. Enforcement of security 

Enforcement of security French law-governed security interests can be enforced upon non-payment of the secured obligation but not upon the mere occurrence of any other event of default.

Security may be enforced by way of judicial proceedings (judicial foreclosure or public auction) or, depending on the type of security, by way of contractual enforcement (pacte commissoire).  Enforcement under judicial proceedings may take some time while contractual enforcement may be swift.

10. Bankruptcy

The opening of bankruptcy proceedings (safeguard proceedings (sauvegarde judiciaire), accelerated safeguard proceedings (sauvegarde accélérée), judicial administration proceedings (redressement judiciaire) or liquidation proceedings (liquidation judiciaire) leads to the moratorium of enforcement of claims and of security interests, except in case of assignment of receivables by Dailly assignment, cash-collateral and trust agreement (fiducie). 

A security interest granted during the clawback period (période suspecte) may be declared null and void if (a) it has been granted to secure a previously incurred debt, or (b) it has been granted while the beneficiary of the security had knowledge of the insolvent state (état de cessation des paiements) of the grantor.  A company is in an insolvent state if it is unable to pay its liabilities as they fall due with its immediately available assets. 

A French court may set back the insolvency date of a company as far as 18 months prior to the opening judgment of the relevant bankruptcy proceeding.

France’s employment law is known for being detailed and protective of employees, imposing significant obligations on employers. Any foreign company looking to hire staff or establish operations in France needs to understand the basics of the labor law framework, hiring requirements (e.g. nuances around employment contract formation, social security registration obligations, etc.), employee individual and collective rights and obligations, and rules on termination. While French labor law may appear complex, with proper guidance companies can successfully manage compliance and maintain good labor relations.

Labor law framework: Employment relations in France are governed by the French Labor Code ("Code du Travail"), which provides mandatory standards, notably on all aspects of the employment relationship – from the recruitment and hiring, through performance, to termination. These statutory rules are supplemented by mandatory collective bargaining agreements (CBAs) specific to industries or sectors, which often impose additional and/or more advantageous obligations (e.g. higher minimum salaries, specific bonuses such as a seniority bonus, and higher severance pay, etc.).

An individual employment contract – and, to some extent, collective company-level agreements where applicable – further sets out the terms between employer and employee, but, as a general rule, it cannot derogate from the Labor Code or applicable CBA in ways that disadvantage the employee. In principle, the hierarchy of norms means the employee will always benefit from the most favorable provision among the law, CBA, company-level agreements or policies, and the employment contract – although this may vary depending on the subject matter.

Employment contracts: French law recognizes several types of employment contracts, the most common being the permanent contract (CDI – "contrat à durée indéterminée") and the fixed-term contract (CDD – "contrat à durée déterminée"). A CDI is an open-ended contract with no set end date – this is the default form of employment in France and is generally expected for ongoing staffing needs. A CDD, on the other hand, is very resctricted and is allowed only for temporary roles or specific situations (such as covering for an employee on leave or handling a temporary increase in activity); it must have a defined duration or end event, and 18 months is usually the maximum length (up to 24 months in special cases). Importantly, a fixed-term contract cannot be used to fill a role that is permanent in nature – doing so may entail a risk of reclassification as a permanent employee. in case of litigation, this particularly entail severance payments normally owed under a CDI, at the end of the employment relationship.

All employment contracts and employment-related documents should be written in French or at least provided in a French-language version, to comply with the Toubon Law (which mandates French for documents that bind employees). An employee may request a translation in another language for understanding, but the French text will govern in case of dispute. Contracts typically outline the job duties, salary, working hours, place of work, probation period (if any), notice periods, and any post-contract restrictions (like non-compete clauses, if any). Probation (trial) periods are permitted – often 2 to 4 months for a CDI, depending on the employee’s category, and can reach a maximum of 8 months in the case of renewal for executives,. During the probation, either party can terminate with shortened notice and no need to prove cause. After that, the regular dismissal rules and severance entitlements apply.

Work permits and hiring foreign staff: If hiring a non-EU foreign national, employers must obtain authorization before the employee can work in France. All non-EU/EEA/Swiss nationals need a work permit (usually in the form of a long-stay work visa or residence permit with work authorization) to be employed in France. The work permit application is typically handled by the employer via an online portal and must be approved by French authorities prior to the employee’s start date. Criteria include demonstrating the employee’s qualifications and that the salary meets minimum thresholds (often at least the French minimum wage or higher for certain permits). There are streamlined routes for intra-company transferees and “Talent” passports for high-skilled workers. EU citizens, however, are exempt from work permits and can work freely in France.

When planning a temporary assignment of foreign staff to France, factor in several weeks (or months) for the work permit process and ensure the employee obtains the appropriate visa and residence permit as well. Failure to have a valid work authorization can result in penalties for the employer, so compliance here is critical.

Employee rights and working conditions: French labor law sets maximum working hours, minimum wages, and leave entitlements. The standard work week is 35 hours (any work beyond 35 hours generally qualifies as overtime). Overtime is limited (legally capped at 220 hours per year by default, unless a collective agreement sets a different limit) and must be paid with a wage premium – typically +25% for the first 8 hours over 35 per week, and +50% beyond that. There is also (except in cases of derogation) an absolute cap of 10 hours work per day and 48 hours in any single week (with a 44-hour/week average cap over 12 weeks) for reasons of health and safety. Certain executives can be on a working time arrangement counted in days per year – so called "forfait-jours" (i.e., fixed salary for a set number of days or hours per year – usually 218 days per year) which provides more flexibility.

France has a national minimum wage ("SMIC") that is adjusted annually – as of 1 January 2025, it is roughly gross €11.88 per hour (about gross €1,801.80 per month for full-time) and all employees must be paid at least this amount, or higher if a sectoral CBA sets a greater minima. All employees are entitled to paid leaves: the law stipulates 2.5 days of paid leave per month worked, which equates to 5 weeks of paid leaves per year for a full-time employee.

Employees may also benefit from rest days if the working hours exceed 35 per week. There are also 11 public holidays annually (some of which are paid days off, depending on the day and sector). Other leave rights include paid maternity leave (16 weeks or more), paternity leave (28 days as of recent reforms), paid sick leave (with social security reimbursement after a short waiting period), and various family-related leaves.

Employees in France benefit from job security and anti-discrimination protections. Dismissal is regulated (as mentioned below), and employees benefit from a protection against unfair discrimination based on gender, origin, religion, age, etc. Harassment (moral or sexual) in the workplace is expressly prohibited, and employers must take steps to prevent it. Employers are also obligated to ensure health and safety at work (with robust requirements for risk assessments and, if you have 50+ employees, a Social and Economic Committee that notably addresses safety and other issues). For companies above 11-employees threshold, setting up employee representative bodies (i.e., a Social and Economic Committee, "CSE") is mandatory – and which attributions vary according to the total workforce and may have consultation rights on economic changes, work conditions, and, in any case, can facilitate dialogue between the employer and the employees. It could also be required for the employer to inform and consult the CSE on major decisions potentially having an employment-related impact like restructurings or collective layoffs, and certain employers must negotiate with employee representatives on topics like remuneration and gender equality annually.

From the employee’s side, key obligations include performing the job faithfully and according to instructions, respecting confidentiality (especially if handling sensitive information), and observing any valid non-compete or non-solicitation clauses after departure (such clauses being enforceable only under certain conditions). In any case, employees also owe a general duty of loyalty to the employer – e.g. not to compete unfairly or engage in gross misconduct.

Termination of employment: One of the most crucial aspects for foreign investors to keep in mind is that France does not recognize “at-will” employment. Termination must be for a lawful cause and follow a defined procedure for it to be valid.

In other words, an employer cannot simply dismiss an employee without justification (except during the probation period or by mutual agreement). There are two broad categories of authorized termination: dismissal for personal reasons (related to the individual employee – performance issues, misconduct, incapacity, etc.) and dismissal for economic reasons (job eliminations due to economic difficulties, reorganization, or other business motives). In all cases, the employer must have a “real and serious cause” ("cause réelle et sérieuse") for the termination. This is assessed by labor courts if challenged: the cause must be real (based on objective facts) and serious (of sufficient gravity to make continuation of employment untenable).

The dismissal process requires following statutory steps. For an individual termination, the employer must: (1) summon the employee to a preliminary meeting via a written notice; (2) hold the meeting to hear the employee’s explanation (with at least 5 working days’ notice given, and the employee may be assisted); (3) wait at least 2 business days, then send a registered letter of termination stating the reasons. Failure to follow this procedure makes the dismissal procedurally unfair, even if there was a legitimate substantive reason.

In cases of misconduct, similar steps apply in addition to a specific disciplinary procedure. For economic layoffs, additional rules apply: if laying off one employee for economic reasons, a similar procedure is followed with economic rationale given. If multiple employees are affected (collective redundancies), the process becomes more involved – including consultation with employee representatives (for 10+ employees), preparation of a social plan ("plan de sauvegarde de l’emploi") for large-scale layoffs, notification to government authorities, etc.

Upon termination (other than for gross misconduct), an employee is entitled to notice or pay in lieu (e.g. a few months’ notice for longer-serving employees, as per the employment contract or CBA) and statutory severance pay if they have at least 8 months of service (unless otherwise stated by the CBA or the employment contract). The statutory severance ("indemnité légale de licenciement") is calculated based on tenure and salary – the law provides a minimum of roughly ¼ of a month’s pay per year of service for the first 10 years, and ⅓ of a month’s pay per year beyond 10 years (Collective agreements or contracts may stipulate higher severance.) If a dismissal is found by a labor court to be without real and serious cause (i.e. unfair), the employee can receive additional damages. Since 2017, France introduced a reference grid for unfair dismissal damages, capping them based on service (for example, 3 months’ pay minimum to around 20 months’ pay maximum for the longest tenures).

The employment contract could also be terminated through a resignation (with notice) by the employee or through a mutual agreement termination, by both parties. The latter, known as "rupture conventionnelle", is a mechanism where employer and employee can mutually agree to end the contract on agreed terms, which are then homologated by the labor local authorities.

Practical considerations: Managing French HR compliance requires careful attention to process and documentation.

Foreign investors should budget for benefits (like paid leaves and social security contributions for example). It is highly advisable to have well-drafted employment contracts (in French) and to seek local legal expertise when dealing with all aspects of employment law matters like recruitment, questions regarding the performance of the employment contract and also terminations/ collective redundancies.

Constructive labor relations are crucial – engaging with employee representatives in good faith and adhering to consultation duties will build trust and also reduce legal risks.

France’s large talent pool and the ability to implement flexibility through collective agreements (for instance, to adjust working hours or implement incentive schemes) can be advantageous. Companies have learned to operate within the system by planning ahead: e.g. using the trial period to ensure a good fit. By understanding and respecting employee rights, foreign businesses in France can foster a motivated workforce and avoid the pitfalls of labor disputes.

The French real estate market presents both opportunities and complexities for international investors and businesses. The French real estate market is characterized by strong fundamentals in major urban centers, particularly Paris, Lyon, Marseille, and Bordeaux. The market benefits from consistent demand driven by population growth, tourism, and France's position as a leading European business hub. Property rights are well-established and protected under French law, with transparent registration systems providing security to investors.

There are several ways to own property in France, including:

• Full ownership (pleine propriété) – The most common form where the owner holds complete rights to the property, including both the usufruct (right to use and derive income) and bare ownership, with full control over sale, rental, and transfer.
• Bare ownership and usufruct – A split ownership structure where one party holds bare ownership (nue-propriété) with the right to sell or bequeath the property, while another holds usufruct (usufruit) with the right to use the property or collect rental income.
• Joint ownership (indivision) – Multiple owners hold undivided shares of the same property. Each co-owner possesses a percentage share, and decisions typically require unanimous consent or majority approval depending on the nature of the decision and whether the joint ownership is organized by contract.
• Co-ownership (copropriété) – A property divided into private lots and common areas. The private lots can be held in full ownership, as bare ownership and usufruct, or even in joint ownership. The common areas are own by all the co-owners and managed by a syndic, appointed by them.
• Superficies right (droit de superficie) – The ownership of land is separated from the ownership of constructions erected on it. This is typically used for long-term or construction leases, where the tenant owns the constructions it builds on the land until the lease expires.
• Volumes (volumétrie) – Refers to the division of a property into three-dimensional volumes without common areas. It requires a complex set of easements and rights of way necessary for the interlocking of the volumes.

Real Estate Brokers

Real estate brokers in France (agents immobiliers) are highly regulated professionals who require a license and financial guarantee to operate. To practice legally, brokers must obtain a professional license (carte professionnelle) issued by the local Chamber of Commerce and Industry (CCI), which requires demonstrating appropriate educational qualifications or professional experience, maintaining a clean criminal record, and securing financial guarantees through mandatory insurance coverage including professional indemnity insurance and a financial guarantee to protect client funds. The law imposes strict obligations regarding fee transparency, requiring brokers to clearly display their commission rates and provide written fee arrangements (mandat) before any engagement, while also mandating proper handling of client funds through segregated accounts.

Transaction Process

Due Diligence

French law requires comprehensive property disclosure. Key documents include, inter alia:

• Title deeds and land registry extracts, in order to ascertain ownership and 30-year root of title
• Planning certificates and zoning information
• Co-ownership/volumes documents
• Rental agreements (for income-producing properties)
• Technical diagnostics
• Environmental documentation

Purchase Timeline

A typical transaction proceeds as follows:

• Offer to purchase (binding or non-binding)
• Preliminary contract subject to condition(s) precedent
• Deed of sale

Most acquisitions of land are subject to local government or SAFER (for agricultural land) pre-emption right that is usually treated by specific condition precedent in the preliminary agreement.

Conversely, investors may prefer to purchase the investment vehicle, providing tax efficiency with lower registration duties, and maintaining legal continuity. However, the share deal structure means the buyer inherits all company liabilities, including hidden debts and potential litigation, necessitating thorough due diligence

Notaire's Role

All acquisition of a real estate asset must be processed through a licensed notaire, a public officer who ensures legal compliance, conducts title searches, calculates taxes, and registers the transfer. Notaire fees are regulated based on (i) the nature of the property, (ii) the nature of the transaction, and (iii) the purchase price. Share deals usually do not involve notaires.

Rental regulations

French tenant protection laws are comprehensive, with specific regulations depending on the nature of the occupation, including (i) residential leases and (ii) commercial leases.

Some rules apply to all leases, in particular the obligation to deliver premises suitable to the contractually intended use. Landlord cannot depart from such obligation that is of the essence of a lease.

Residential Leases

These are highly regulated, with limited ability to depart from statutory requirements by contract. The term is typically six years (unfurnished – corporate landlord), three years (unfurnished – individual landlord), or one year (furnished), with automatic renewal unless the landlord objects in advance for limited reasons (sale of the property, repossession, or legitimate and serious grounds). Tenants may terminate at any time subject to prior notice.

Rent increases are strictly controlled and carried out on the basis of the national reference index (IRL). Additionally, certain cities impose rent caps.

Commercial Leases

Commercial leases are governed by a comprehensive regulatory framework providing significant protection to commercial tenants, particularly through the concept of proprietary lease rights, which allows businesses to renew their leases and maintain their commercial location. The standard commercial lease term is nine years, known as a "3-6-9 lease," which permits the tenant to terminate the lease at the end of each three-year period, while the landlord's right to refuse renewal is strictly limited to specific circumstances (such as serious tenant breaches, reconstruction projects), or to pay a substantial eviction indemnity covering the damage caused to the tenant by the non-renewal of the lease. This framework aims to protect commercial tenants' goodwill and business continuity.

Rent regulations are equally protective, with rent increases generally limited to the Commercial Rent Index (ILC) or the Tertiary Activities Rent Index (ILAT) for office spaces and certain service activities. At lease renewal, rent can be revised to market value, but this increase is typically capped unless the landlord can demonstrate significant changes in local commercial conditions or substantial improvements to the property. The rent revision process is subject to strict procedural requirements, and disputes are resolved by specialized commercial lease courts.

Additionally, commercial tenants benefit from the right to assign their lease together with the business as a going concern, sometimes subject to certain restrictions, ensuring the transferability of the commercial value associated with the leased premises.

Construction

French construction law establishes one of the most comprehensive liability frameworks in Europe, centered on protecting property owners and ensuring construction quality through mandatory insurance requirements and extended liability periods. The cornerstone of this system is the ten-year insurance cover (garantie décennale), which holds contractors, architects, and other construction professionals jointly and severally liable for any defects that compromise the structural integrity or habitability of a building for ten years following completion. This strict liability regime applies regardless of fault and covers major structural defects, making it mandatory for all construction professionals to carry 10-year insurance cover before commencing work. Additionally, French law provides for a two-year warranty (garantie de bon fonctionnement) covering defects in equipment that can be repaired without affecting the structure, and a one-year warranty (garantie de parfait achèvement) for any defects appearing within the first year after delivery.